Good day,
The soft ELD mandate last December contributed to a red-hot freight market that had started to show signs of life in the summer. Hurricanes Harvey and Irma and a strong holiday retail season further increased demand over capacity, and looking into the spring, many industry observers expected massive disruptions on April 1st when the FMCSA began its hard enforcement of the ELD mandate.
It didn’t turn out that way, though. Industry compliance with the mandate was already above 90% by April and carriers had started adapting their behavior to run legal on the more strict electronic logs. SONAR did not register a large bump in the tender rejection index—or ‘turndowns’—indicating that freight demand and trucking capacity were still relatively well-balanced.
We saw no data to suggest a massive drop-off in truck productivity, and today we reported that SONAR is actually showing an increase in our “HOS Daily Driving Utilization Index” (SONAR code: HOS11). Data from ELD vendors feeds that index to help us determine how much of drivers’ 11 hours are dedicated to actually putting miles on the road. Before the ELD soft mandate, drivers were getting 6.52 productive hours a day on average; but now they’re logging 6.8 hours a day, and pushing up toward 7 hours. We calculate that drivers managing their hours of service properly are recovering an additional $54 per day.
Did you know?
Despite short-term stability, used Class 8 truck sales volumes were up 10% year-to-date, according to the latest release of the State of the Industry: U.S. Classes 3-8 Used Trucks, published by ACT Research. The report also indicated that the average price of total used Class 8 trucks rose 2% y/y, while average mileage fell 1% y/y and the average age of used Class 8 trucks dropped 4% compared to the same time in 2017.
Quotable:
“I have [gotten a raise], because I went out and started my own company this year. The rates have never been this good in over 20 years. I hope the driver shortage continues. Skilled drivers like me aren’t cheap right now. I’m anticipating I’ll make $85,000 to $120,000 this year.”
-Michael Dow, a truck driver from Dallas, TX, who co-founded Dow Brothers Transportation this year
In other news:
America has a massive truck driver shortage. Here’s why few want an $80,000 job.
Many trucking companies are so desperate for drivers that they are offering signing bonuses and pay raises. So why don’t more Americans want this job? We asked truck drivers who have been doing the job anywhere from four months to 40 years for their views. (Washington Post)
Logistics giant Maersk starts using blockchain platform for marine insurance
Developed by EY and Guardtime, Insurwave uses distributed ledger technology from cloud platform Microsoft Azure and follows global insurance standards. At the beginning of May, Microsoft Azure had announced the release of its blockchain app creation service, Azure Blockchain Workbench. (CoinTelegraph)
Brazil truckers strike to cost government $2.6B through end of year
The government said Sunday it will cut taxes on diesel fuel, freeze the price 60 days and let them change once every month afterward, and compensate state-controlled oil company Petróleo Brasileiro SA, or Petrobras, and its private-sector competitors, among other concessions. (Wall Street Journal)
Delays and poison pills: NAFTA talks run out of road
President Donald Trump is running out of time to deliver a revamp of the North American Free Trade Agreement (NAFTA) he promised for this year and people involved in the talks say the crunch is largely of his administration’s own making. (Reuters)
Canadian Pacific Railway union serves strike notice
Union members representing Canadian Pacific Railway Ltd’s (CP) conductors and locomotive engineers have served a notice to go on strike as early as May 29, according to a union statement released on Saturday. (CNBC)
Final Thoughts:
Industrial output has been climbing for three straight months, and there have been some encouraging, albeit inconsistent, signals from the Trump administration about the risk of further tariffs in the United States’ bilateral relationship with China. Top-tier media outlets like the Washington Post are finally reporting on the driver shortage (see above), which, as Donald Broughton pointed out at Transparency18, is a double-edged sword. “I like it when my trucking companies are reporting they are having trouble finding drivers ….[because] when they have it all figured out, the cycle is over,” Broughton said.
The national freight market had a somewhat soft spring season, but was still quite strong year-over-year, and we’re starting to see signs of life in markets like Dallas, where outbound turndowns have increased from 15% to 17% in the past few days.
Hammer down everyone!
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